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Saturday, 26 December 2015

A personal Message from Dirk HelbingDear FuturICT SupportersThis has been another momentous year. The digital revolution is on its way at
full pace. Many countries have invested
into data-driven governance. The idea that "more data is more
knowledge, more knowledge is more power, and more power is more success"
has promoted the concept of a "benevolent
dictator" or "wise king", able to predict and control the
world in an optimal way. This "magic formula" seems to be the main
reason for the massive collection of personal data, which companies and
governments alike have engaged in.

The concept of the benevolent dictator
implies that democracy would be
overhauled. In Silicon Valley there have been many voices claiming that
democracy is an "outdated technology," which has to be replaced by
something else. Similar arguments have been put forward by
politicians in a variety of countries. There is an acute danger that
democracy would be ended in response to challenges and threats such as climate
change, resource shortages, and terrorism. However, recent data-driven analyses
show that democracy is not a luxury, in
contrast to what has been claimed by increasingly many people before.

The
anti-democratic trend is dangerous and needs to be stopped. First, because ending freedom,
participation, and justice would end in socio-political instability and finally
in revolution or war. (Similar instabilities have occurred during the
transition from the agricultural to the industrial society and from there to
the service society.) Second, because the above magic formula is based on
flawed assumptions.

Society
is not a machine. It cannot be steered like a car. Interaction - and the resulting complex dynamics of
the system - changes everything. We know this, for example, from spontaneous
breakdowns of traffic flow. Even if we could read the minds of all drivers,
such "phantom traffic jams" could not be prevented. But there is a
way to prevent them, based on the use of suitable driver assistant systems: distributed control approaches, using
knowledge from complexity science.

The paradigm of data-driven optimization
would possibly work if we knew the right goal function; moreover, the world
would have to change slowly enough, it would have to be sufficiently well
predictable, and simple enough. However, all these preconditions are not
fulfilled. As we continue to network the world, its complexity grows faster
than the data volume, the processing power and the data that can be
transmitted. Many aspects of the world are emergent and hardly predictable. The
world is quickly changing by innovation, and we need even more of it! Not even
the goal function is well-known: should it be gross national product per capita
or sustainability, power or peace, average lifespan or happiness? In such
cases, (co-)evolution, adaptation, and resilience are the right paradigms, not
optimization.

I have spent last year to make
decision-makers around the globe aware of these things, to save democracy, to
get better information systems on the way than those that are based on mass
surveillance and brute-force data mining; to argue for interdisciplinary and
global collaboration; for approaches built on transparency and trust; for open
and participatory systems, because they mobilize the capacity of the entire
society; and for systems based on diversity
and pluralism, because they promote innovation, societal resilience, and
collective intelligence.

I
would like to ask you to engage strongly along these lines too. Because if we don't manage to get things
on the right way, we may lose many
societal, economic, legal and cultural achievements of the past centuries; we
might see one of the darkest periods of human history; something much worse
than "1984 - Big Brother is watching you": a society, in which we
might lose our freedom, enslaved by a citizen score that would give us plus or
minus points for everything we do, where the government and big
corporations would determine how we should live our lives.

Fortunately,
there is some encouraging news too:The USA have
started to invest in a new strategy. It seems they are betting on a combination
of reindustrialization on the one hand, and citizen science and combinatorial innovation on the other. Even
Google has embarked on a new strategy with the founding of Alphabet, which aims
to make the company less dependent on personalized advertising. And Apple has
recognized the value of privacy as a competitive advantage. People also
increasingly understand that the digital
economy is not a zero-sum game. In the area of the Internet of Things,
Google has engaged in open innovation,
and it recently made its Tensorflow Artificial Intelligence software open
source. Tesla Motors has opened up many
of its patents, and many billionaires
have recently promised to donate large sums of money for good. So, we see
many signs of change.

The benefit of open information exchange is becoming
increasingly evident. Sharing information often increases the value of
information, inventions, and companies. If
properly organized, the digital economy provides almost unlimited possibilities
because intangible goods can be reproduced as often as we like. In fact, more
and more money will be earned in virtual worlds. This relates not just to
computer games; Bitcoin has even shown that bits can be turned into gold.
Almost nobody believed this were possible.

Let's hope the development will continue in
this direction. In that case, the digital revolution will take a positive path.
But it's too early to relax. We need to be
highly alert and ready to defend the constitutional principles of our society. Otherwise
our societies will most likely end up disrespecting human rights and fighting
wars.

I am sure our community will experience an
exciting year 2016, and I look forward to the interaction and collaboration
with you!

Best wishes, Happy Holidays, and Seasons
Greetings,

Dirk

PS: Here is some further news - please
remember to send us input about your own news and success stories, so we can
feature it in the next newsletter.

Thursday, 3 December 2015

"Does democracy cause growth, or is it a luxury enjoyed by wealthy countries that slows growth down?“ This is a question that one frequently hears these days.

The Austrian economist Joseph Schumpeter was first to address this question in his book "Capitalism, Socialism, and Democracy" in 1942, at a time when Austria had fallen into the hands of Nazi Germany, after having been one of the most important countries in the world before. This question continues to be of central concern, not only for political economists and development economists. Over the past decades, stirred by the disagreement of prominent scientists such as Milton Friedman (1962) and Seymour Martin Lipset (1959) over the corrent answer, this issue has been looked at time and again.

Famously, the American macroeconomist Robert Barro (1996) found that "the net effect of democracy on growth performance cross-nationally over the last five decades is negative or null" (Gerring, Bond, Barndt and Moreno 2005, p.323). Analyses of this kind have fueled arguments for the position that democracy is a luxury enjoyed by wealthy countries, which creates obstacles for economic development. Other scientists have disagreed with this finding (for example, Gerring et al. 2005). Their findings indicate that only sustained democracy has the virtue of facilitating the accumulation of physical, human, social and political capitals, which in turn leads to growth.

Again, one is left with two conflicting sets of evidence. However, there are two recent breakthroughs, which show that democracy is indeed no luxury. Acemoglu, Naidu, Restrepo and Robinson (2015) show that `regime transitions' and their precise timing are crucial. Democratization has a large positive effect on growth: "by estimating the effects on growth of the unprecedented spread of democracy around the world in the last 50 years [...] estimates imply that a country that transitions from non-democracy to democracy achieves about 20 percent higher GDP per capita in the next 25 years" (Acemoglu et al. 2015, p. 1).

However, the question whether established democracies have incentives to de-democratize remained unsolved. Precisely this question was now addressed by Nax and Schorr (2015). Their data-driven study using high-performance computers reveals "short-run economic incentives to de-democratization for the most economically and democratically developed nations. [However,] These short-run boosts come with intermediate-run reductions of political capitals and with long-run reductions in growth" (Nax and Schorr 2015). Therefore, democracy is more than a luxury. Giving up on it would be a terrible mistake.

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The activities leading to these results has received funding from the European Union Seventh Framework Programme (FP7/2007-2013) under grant agreement n° 284709 - project 'FuturICT', a Coordination and Support Action in the Information and Communication Technologies activity area